When the going gets tough, the tough switch into problem-solving mode.
The ongoing inflationary environment has spared no one. Tech giants, like Meta and Amazon, have resorted to laying off employees. Companies are reevaluating their spending, initiating hiring freezes and becoming more frugal. In times like these, employees need someone at the helm who knows how to navigate such a season without drowning the company, unlike Elon Musk, who appears to be taking Twitter down for good.
In keeping with that, we look at how different CEOs have handled the stress and how you can, too.
Start cutting costs
“We shouldn’t always equate fun with money,” Google CEO Sundar Pichai declared about cost-cutting measures during an internal “all-hands” meeting in New York. Due to high interest rates and economic pressures, tech giant Google has had to review its internal functioning to save money, and one way Pichai has found to do so is by cutting costs. This includes less travel and leisure spending and frugal office parties. While this might seem frivolous, employees were visibly irked by these measures as they blamed the CEO for “nickel-and-diming” them.
Another way companies are cutting costs is by cutting headcounts. For instance, Apple CEO Tim Cook and Amazon CEO Andy Jassy have initiated hiring freezes to reduce expenses. Cook dubbed this strategy as “very deliberate” during an interview. The company is prioritizing spending by only hiring where it deems necessary, like in its research and development department.
A great takeaway from Pichai’s handling of this situation is that he involved employees in strategizing. He introduced a “Simplicity Sprint” that asked nearly 180,000 employees to come up with ideas to get better results faster and eliminate waste. This is crucial because involving employees can help improve collaboration and bring everyone on the same page. Plus, one survey found that over 80 percent of people attributed failures in the workplace to a lack of proper collaboration and communication.
When faced with challenging circumstances, your primary recourse might be to adopt a temporary solution that provides immediate relief, like a band-aid solution. However, that might not bode well in the long term, setting you up for failure. Cook revealed, “We believe in investing through downturns—we’ve always done that. We’ve always found out that it made us stronger on the other side.” For him, it is important to invest while being mindful of where the money goes.
While thinking long-term might feel ridiculous when your short-term outlook is all up in flames, you must remember that this wave will pass at some point, and starting from scratch is not pretty.
You might have some great projects or infrastructural developments in the pipeline that would boost profitability. However, now is probably not the best time to go ahead with them, as you could refocus the money on optimizing existing successful projects.
For instance, Amazon CEO Andy Jassy detailed, “We’re trying to defer building activity on properties where we just don’t need the capacity yet and we’re going to let some leases expire as well. But I’m also quite confident we’ll grow into this footprint.” Google, too, has canceled some new launches, such as that of its next-gen Pixelbook laptop, and reduced funding for its in-house incubator.
As ugly as it may seem, you might need to increase prices to cope with inflation and pump money back into your company. For instance, Apple raised the prices for many of its apps on the app store outside the United States. Evidently, in times like these, a CEO has to take the tough call to push up costs to stay afloat.
The President of Personal Insurance Company Travelers, Michael F. Klein, said, “Our primary response to the environmental challenge of inflation is higher pricing.” And that appears to work for the companies.
What should you definitely not do during such a period?
- Not communicating with your employees. If you don’t tell your employees what your plan or strategy is, they will feel neglected and might even start to panic and speculate.
- Not doing anything at all. In most cases, you cannot stay the same and hope to ride the tide and come out on the other side. Depending on the industry you are in, make sure you take adequate steps to build a safety net for your business.
- Drive your business to the ground and scare employees. Now that Twitter is going bust, there is plenty to learn from Elon Musk on what not to do. By initiating layoffs out of the blue, changing the internal functioning model and overworking employees, Musk has driven its staff to quit, leaving the social media platform as a skeleton of what it used to be.
The ongoing inflationary pressures are expected to bleed into the upcoming years. All things considered, CEOs should remain poised to deal with challenges and have a sustainable strategy in place to avoid a boom and bust situation.
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